Dave Byrnes, Head of Distribution for Security Benefit, recently wrote an article for Advisor Magazine
As traditional bonds face structural headwinds and sequence-of-returns risk looms larger for retirees, research increasingly supports adding a fixed indexed annuity to achieve smoother, stronger long-term outcomes.
Given ongoing volatility and market uncertainty, a key challenge for advisors and their clients is not just earning returns, or accumulation, it is preserving them. A single poorly timed market correction, occurring in the early years of retirement (sequence of returns risk), can permanently impair a portfolio’s ability to sustain income. Fixed indexed annuities (FIAs) are designed to address this problem and give advisors multiple options around their portfolio mix, diversification needs and asset growth potential and protection.
FIAs are insurance contracts that credit interest linked to the performance of a financial index, such as the S&P 500 or the NASDAQ 100, while providing a floor that protects principal from market losses. The result is a distinctive risk profile: participation in index growth, without the often-tumultuous downside. Far from being just a defensive tool, data finds that FIAs can reduce overall portfolio volatility, enhance diversification and improve risk-adjusted returns over time.